December 15, 2023
JAKARTA – The Cooperatives and Small and Medium Enterprises (SMEs) Ministry has issued a stern warning to video-streaming platform TikTok, demanding compliance with rules that prohibit social media platforms from offering e-commerce transactions.
The ministry says it found “no significant changes” in TikTok Shop after the feature’s relaunch following TikTok’s collaboration with local e-commerce platform Tokopedia.
TikTok is owned by China-based ByteDance.
According to the ministry, TikTok Shop still allows users to buy products directly within the TikTok app.
“As we’ve seen on Dec. 12 during its local trade campaign, [TikTok] was still conducting [business] transactions on social media,” said the ministry’s special staffer on creative economy empowerment, Fiki Satari, as quoted in Kumparan.
“Social media is a communication platform, and TikTok is facilitating business transactions,” he added.
Fiki dismissed any notion of an “adaptation process” and stressed the need for complete compliance, likening TikTok’s actions to “unauthorized” trial runs that should remain internal instead of being open to public participation.
“This is what we want to mitigate. Protecting local SMEs, especially small producers, is a top priority,” Fiki affirmed, highlighting the government’s commitment to protecting local businesses that account for 97 percent of employment in the country.
The ministry explained it was prepared to collaborate with the trade and investment ministries to address the issue.
The Trade Ministry, meanwhile, has granted TikTok and Tokopedia a transition period until April 2024 to demonstrate TikTok Shop’s compliance with e-commerce rules.
Trade Minister Zulkifli Hasan acknowledged the challenges of integrating technologies, noting that the transition period served as a “trial run” for the partnership.
He added that the government did not prohibit any product but rather had policies in place to regulate governance, so that the e-commerce ecosystem would be useful and help develop the country’s economy.
The minister’s remarks suggested a measured approach toward the rapidly evolving e-commerce landscape.
He also encouraged domestic business actors to go global by joining forces.
TikTok has committed to investing US$1.5 billion in Tokopedia in a deal that would allow the video platform to acquire 75.01 percent of Tokopedia, while Tokopedia’s parent company GoTo would retain the remaining 24.99 percent.
TikTok’s investment will go directly to Tokopedia, according to GoTo’s disclosure, while GoTo will receive dividends from the collaboration and get a boost in its earnings before interest, taxes, depreciation and amortization (EBITDA).
GoTo would receive a service fee of about 0.4 percent levied on TikTok and Tokopedia’s combined gross merchandise value (GMV), according to GoTo’s investor update report released Thursday.
The report suggests that, if the GMV of TikTok Shop and Tokopedia were to reach $2.9 billion in the third quarter of 2023, GoTo would earn a service fee of $11.4 million for that quarter.
These fees would be paid by Tokopedia on a quarterly basis and go to GoTo’s revenue.